A-7177, MARCH 30, 1925, 4 COMP. GEN. 759

A-7177: Mar 30, 1925

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WILL NOT BE CONSIDERED AS HAVING THE EFFECT OF CHANGING THE LAWFUL BENEFICIARIES OF A PREVIOUSLY MATURED POLICY OF WAR RISK INSURANCE SO AS TO REQUIRE THE PAYMENT OF THE REMAINING UNPAID INSURANCE INSTALLMENTS TO ANOTHER. IN WHICH THE BENEFICIARY WAS DESIGNATED AS WIFE OF THE INSURED WHEN IN FACT SHE WAS NOT. THE RIGHTS OF A PERSON WHO WAS THE WIFE AND DESIGNATED BENEFICIARY AT THE TIME OF ISSUANCE OF THE INSURANCE AND WHO REMAINED THE DESIGNATED BENEFICIARY IN THE POLICY UNTIL MATURITY. 1925): I HAVE YOUR LETTER OF DECEMBER 26. WHETHER THE INSURANCE CAN BE AWARDED TO THE NOMINATED BENEFICIARY WHO WAS THE WIFE OF THE INSURED WHEN THE POLICY WAS ISSUED. WHO WAS NOT HIS WIFE AT THE TIME OF HIS DEATH.

A-7177, MARCH 30, 1925, 4 COMP. GEN. 759

WAR RISK INSURANCE THE ENACTMENT OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 607, WILL NOT BE CONSIDERED AS HAVING THE EFFECT OF CHANGING THE LAWFUL BENEFICIARIES OF A PREVIOUSLY MATURED POLICY OF WAR RISK INSURANCE SO AS TO REQUIRE THE PAYMENT OF THE REMAINING UNPAID INSURANCE INSTALLMENTS TO ANOTHER. WHERE A POLICY OF WAR RISK INSURANCE MATURED PRIOR TO JUNE 7, 1924, IN WHICH THE BENEFICIARY WAS DESIGNATED AS WIFE OF THE INSURED WHEN IN FACT SHE WAS NOT, THE BENEFICIARY SHOULD NOW BE DETERMINED UNDER THE PROVISIONS OF SECTION 303 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 625, RETROACTIVELY IN EFFECT AS THOUGH NO BENEFICIARY HAD BEEN DESIGNATED. UNDER THE PROVISIONS OF SECTION 23 OF THE ACT OF AUGUST 9, 1921, 42 STAT. 155, EFFECTIVE UNTIL JUNE 7, 1924, AND REENACTMENT THEREOF IN ACT OF MARCH 4, 1925, 43 STAT. 1308, RETROACTIVELY EFFECTIVE FROM JUNE 7, 1924, THE RIGHTS OF A PERSON WHO WAS THE WIFE AND DESIGNATED BENEFICIARY AT THE TIME OF ISSUANCE OF THE INSURANCE AND WHO REMAINED THE DESIGNATED BENEFICIARY IN THE POLICY UNTIL MATURITY, MAY NOT BE DEFEATED BY REASON OF A DIVORCE FROM THE INSURED SUBSEQUENT TO THE ISSUANCE OF THE POLICY AND PRIOR TO ITS MATURITY.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, MARCH 13, 1925 (AS AMENDED MARCH 30, 1925):

I HAVE YOUR LETTER OF DECEMBER 26, 1924, PRESENTING THE FACTS IN TWO CASES AND REQUESTING DECISION WHETHER, IN THE FIRST CASE, INSURANCE CAN BE AWARDED TO THE ESTATE OF THE INSURED, AND IN THE SECOND CASE, WHETHER THE INSURANCE CAN BE AWARDED TO THE NOMINATED BENEFICIARY WHO WAS THE WIFE OF THE INSURED WHEN THE POLICY WAS ISSUED, BUT WHO WAS NOT HIS WIFE AT THE TIME OF HIS DEATH.

THE FACTS ARE STATED AS FOLLOWS:

1. A CONVERTED HIS INSURANCE INTO A 20-YEAR ENDOWMENT POLICY, NAMING AS BENEFICIARY B, WHO HE STATED WAS HIS WIFE. HE DIED JULY 5, 1923. THE INSURANCE, PAYABLE IN THIRTY-SIX EQUAL MONTHLY INSTALLMENTS, WAS AWARDED TO B UPON PROOF OF MARRIAGE. BEFORE THE COMPLETION OF PAYMENTS IT WAS DISCOVERED THAT HIS ALLEGED MARRIAGE WITH B WAS VOID BY REASON OF THE FACT THAT HE HAD A FORMER WIFE LIVING FROM WHOM HE HAD NOT BEEN DIVORCED. IS TO BE NOTED THAT A LARGE PORTION OF THE MONTHLY INSTALLMENTS WAS NOT PAYABLE UNTIL AFTER JUNE 7, 1924.

2. C HAVING CONVERTED HIS INSURANCE INTO AN ENDOWMENT POLICY MATURING AT THE AGE OF 62, IN WHICH HE NAMED HIS THEN WIFE AS BENEFICIARY, DIED JUNE 30, 1924. PREVIOUS TO JUNE 7, 1924, AND SUBSEQUENT TO THE DESIGNATION, HE WAS DIVORCED FROM HIS WIFE BUT DID NOT CHANGE THE BENEFICIARY OF HIS INSURANCE.

THE WAR RISK INSURANCE ACT AS AMENDED BY THE ACT OF JUNE 25, 1918, 40 STAT. 615, PROVIDES AS FOLLOWS:

* * * THE INSURANCE SHALL BE PAYABLE ONLY TO A SPOUSE, CHILD, GRANDCHILD, PARENT, BROTHER, OR SISTER, AND ALSO DURING TOTAL AND PERMANENT DISABILITY TO THE INJURED PERSONALLY, OR TO ANY OR ALL OF THEM. * * *

SECTION 13 OF THE ACT OF DECEMBER 24, 1919, 41 STAT. 375, ENLARGED THE PERMITTED CLASS TO INCLUDE "UNCLES, AUNTS, NEPHEWS, NIECES, BROTHERS-IN- LAW, AND SISTERS-IN-LAW OF THE INSURED" AND MADE THE PROVISION RETROACTIVE TO OCTOBER 6, 1917. THIS LIMITATION ON DESIGNATION OF BENEFICIARIES, OR ESTABLISHMENT OF A PERMITTED CLASS, WAS REENACTED IN SECTION 300 OF THE WORLD WAR VETERANS' ACT, JUNE 7, 1924, 43 STAT. 624.

YOU STATE THE POLICIES HERE FOR CONSIDERATION CONTAIN THE FOLLOWING PROVISIONS, TAKEN FROM SECTION 16 OF THE ACT OF DECEMBER 24, 1919, 41 STAT. 367:

IF NO BENEFICIARY WITHIN THE PERMITTED CLASS BE DESIGNATED BY THE INSURED, EITHER IN HIS LIFETIME OR BY HIS LAST WILL AND TESTAMENT, OR IF THE DESIGNATED BENEFICIARY DOES NOT SURVIVE THE INSURED, THEN THERE SHALL BE PAID TO THE ESTATE OF THE INSURED THE REMAINING UNPAID MONTHLY INSTALLMENTS PAYABLE AND APPLICABLE AS THEY BECOME DUE, UNLESS OTHERWISE ELECTED.

THIS INSURANCE IS GRANTED UNDER AND SUBJECT TO THE PROVISIONS OF THE WAR RISK INSURANCE ACT AND AMENDMENTS AND SUPPLEMENTS THERETO. * * *

SECTION 303 OF THE WORLD WAR VETERANS' ACT, JUNE 7, 1924, 43 STAT. 625, REENACTS BUT MATERIALLY AMENDS THIS PROVISION, RETROACTIVELY EFFECTIVE TO OCTOBER 6, 1917, AS FOLLOWS:

IF NO PERSON WITHIN THE PERMITTED CLASS OF BENEFICIARIES SURVIVE THE INSURED, OR IF BEFORE THE COMPLETION OF PAYMENTS THE BENEFICIARY OR BENEFICIARIES SHALL DIE AND THERE BE NO SURVIVING PERSON WITHIN SAID PERMITTED CLASS, THEN THERE SHALL BE PAID TO THE ESTATE OF THE INSURED THE PRESENT VALUE OF THE MONTHLY INSTALLMENTS THEREAFTER PAYABLE UNDER THE PROVISIONS OF HIS TITLE: PROVIDED, IN CASES WHERE THE ESTATE OF THE INSURED WOULD ESCHEAT UNDER THE LAWS OF THE PLACE OF HIS RESIDENCE THE INSURANCE SHALL NOT BE PAID TO THE ESTATE OF THE INSURED, BUT SHALL ESCHEAT TO THE UNITED STATES AND SHALL BE CREDITED TO THE UNITED STATES GOVERNMENT LIFE-INSURANCE FUND OR THE MILITARY AND NAVAL INSURANCE APPROPRIATION, AS MAY BE PROPER. THIS SECTION SHALL BE DEEMED TO BE IN EFFECT AS OF OCTOBER 6, 1917.

SECTION 23 OF THE ACT OF AUGUST 9, 1921, 42 STAT. 155, AMENDED SECTION 402 OF THE WAR RISK INSURANCE ACT BY ADDING SUBSECTION (A) TO READ AS FOLLOWS:

WHERE A BENEFICIARY AT THE TIME OF DESIGNATION BY THE INSURED IS WITHIN THE PERMITTED CLASS OF BENEFICIARIES AND IS THE DESIGNATED BENEFICIARY AT THE TIME OF THE MATURITY OF THE INSURANCE BECAUSE OF THE DEATH OF THE INSURED, SUCH BENEFICIARY SHALL BE DEEMED TO BE WITHIN THE PERMITTED CLASS EVEN THOUGH THE STATUS OF SUCH BENEFICIARY SHALL HAVE BEEN CHANGED.

NO RETROACTIVE EFFECT WAS GIVEN TO THIS PROVISION AND IT WAS OMITTED FROM AND REPEALED BY THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924. ACCORDINGLY, IT WAS CONTROLLING ONLY FROM AUGUST 9, 1921, TO JUNE 6, 1924, INCLUSIVE.

SECTION 601 OF THE WORLD WAR VETERANS' ACT OF JUNE 7, 1924, 43 STAT. 629, 630, REPEALS THE WAR RISK INSURANCE ACT AS AMENDED, BUT SECTION 602 OF THE SAME ACT PROVIDES AS FOLLOWS:

THE REPEAL OF THE SEVERAL ACTS AS PROVIDED IN SECTIONS 600 AND 601 HEREOF SHALL NOT AFFECT ANY ACT DONE OR ANY RIGHT OR LIABILITY ACCRUED, OR ANY SUIT COMMENCED BEFORE THE SAID REPEAL, BUT ALL SUCH RIGHTS AND LIABILITIES UNDER SAID ACTS SHALL CONTINUE AND MAY BE ENFORCED IN THE SAME MANNER AS IF SAID REPEAL HAD NOT BEEN MADE; NOR SHALL SAID REPEAL IN ANY MANNER AFFECT THE RIGHT TO ANY OFFICE OR CHANGE THE TERM OR TENURE THEREOF.

AS A GENERAL RULE, WAR RISK INSURANCE BEING STATUTORY IS SUBJECT TO STATUTORY CHANGES UNLESS SPECIFICALLY RESERVED IN THE STATUTE. THE PRIMARY RULE MUST BE THAT RIGHTS UNDER POLICIES OF WAR RISK INSURANCE ARE TO BE DETERMINED IN ACCORDANCE WITH THE STATUTE IN FORCE WHEN THE POLICY OF INSURANCE MATURES BY DEATH OR PERMANENT TOTAL DISABILITY. THAT IS, WHERE THE POLICY MATURED PRIOR TO JUNE 7, 1924, AND THE RIGHTS OF THE BENEFICIARY OR BENEFICIARIES UNDER THE PROVISIONS OF THE WAR RISK INSURANCE ACT HAVE ACCRUED, THE ENACTMENT OF THE WORLD WAR VETERANS' ACT WILL NOT BE CONSIDERED AS HAVING THE EFFECT OF CHANGING THE BENEFICIARY OR BENEFICIARIES REQUIRING PAYMENTS OF REMAINING INSURANCE INSTALLMENTS TO ANOTHER. THAT IS, I BELIEVE, ALL THAT THE SAVING CLAUSE IN THE REPEALING PROVISION INTENDED IN SO FAR AS ANY QUESTION HERE INVOLVED IS CONCERNED.

THERE MAY BE EXCEPTIONS TO THIS PRIMARY RULE WHICH WILL BE FOR SUBMISSION AND CONSIDERATION ON THE PARTICULAR FACTS.

ONE EXCEPTION HERE FOR CONSIDERATION SEEMS TO EXIST IN THE RETROACTIVE EFFECT GIVEN TO SECTION 303 OF THE WORLD WAR VETERANS' ACT. THE STATUTE SPECIFICALLY PROVIDES THAT IT SHALL BE "DEEMED TO BE IN EFFECT AS OF OCTOBER 6, 1917.' ACCORDINGLY, WHERE THE BENEFICIARY IS FOR DETERMINATION UNDER THE PROVISIONS OF SECTION 303 OF THE WORLD WAR VETERANS' ACT, NO RIGHTS UNDER THE WAR RISK INSURANCE ACT MAY BE SAID TO HAVE ACCRUED UNDER POLICIES MATURING PRIOR TO JUNE 7, 1924, EXCEPT AS TO INSTALLMENTS OF INSURANCE ACTUALLY PAID PRIOR TO THAT DATE, AND THE REMAINING UNPAID INSTALLMENTS ACCRUED ON AND SUBSEQUENT TO JUNE 7, 1924, MUST BE PAID IN ACCORDANCE WITH THE PROVISIONS OF THE WORLD WAR VETERANS' ACT.

1. IN THE FIRST CASE, THERE MAY BE ACTUAL OR CONCLUSIVE FRAUD IF A FRAUDULENTLY REPRESENTED THE DESIGNATED BENEFICIARY AS BEING A PERSON WITHIN THE PERMITTED CLASS WHEN IN FACT SUCH PERSON WAS NOT WITHIN THE PERMITTED CLASS. BUT EVEN SO, SUCH REPRESENTATION WOULD NOT CONSTITUTE A FRAUD SUFFICIENT TO INVALIDATE OR AVOID THE POLICY, NOT GOING TO THE ESSENCE OF THE CONTRACT, RESULTING IN NO INCREASE IN THE RESPONSIBILITY OF THE GOVERNMENT, AND NOT AFFECTING THE INSURABILITY OF THE LIFE ON WHICH THE POLICY WAS ISSUED, BUT MERELY CAUSING A FAILURE OF THE DESIGNATED BENEFICIARY WITHIN THE PERMITTED CLASS. THE RESULT IS THE SAME AS THOUGH NO BENEFICIARY HAD BEEN DESIGNATED. ALTHOUGH THE POLICY MATURED BY DEATH OF THE INSURED PRIOR TO JUNE 7, 1924, THE DETERMINATION OF THE PROPER BENEFICIARY WITHIN THE PERMITTED CLASS FOR THE PURPOSE OF RECEIVING UNPAID INSTALLMENTS OF INSURANCE IS REQUIRED TO BE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 303 OF THE WORLD WAR VETERANS' ACT, UNDER WHICH INSURANCE WOULD BE PAYABLE TO THE ESTATE ONLY IN CASE THERE IS NO BENEFICIARY WITHIN THE PERMITTED CLASS AUTHORIZED TO TAKE. BECAUSE OF THE FAULT OF THE INSURED, NO PAYMENT SHOULD BE MADE TO THE PROPER BENEFICIARY OF THE AMOUNT HERETOFORE ILLEGALLY PAID TO B, THE DESIGNATED BENEFICIARY, UNLESS AND UNTIL RECOVERY HAS BEEN MADE OF SUCH ILLEGAL PAYMENTS.

2. SECTION 12 OF THE ACT OF MARCH 4, 1925, 43 STAT. 1308, AMENDED THE WORLD WAR VETERANS' ACT BY REENACTING VERBATIM THE QUOTED PROVISION OF SECTION 23 OF THE ACT OF AUGUST 9, 1921, 42 STAT. 155, RETROACTIVELY EFFECTIVE FROM JUNE 7, 1924. THE SITUATION IS NOW THE SAME AS THOUGH THE PROVISION HAD CONTINUED IN EFFECT SINCE AUGUST 9, 1921. UNDER THIS PROVISION OF LAW AS CARRIED INTO THE POLICY, THE RIGHT OF THE DIVORCED WIFE WHO WAS THE WIFE AND DESIGNATED BENEFICIARY AT THE TIME OF ISSUANCE OF THE POLICY AND WHO REMAINED THE DESIGNATED BENEFICIARY IN THE POLICY UNTIL MATURITY OF THE POLICY MAY NOT BE DEFEATED BY REASON OF THE DIVORCE TERMINATING MARRIAGE RELATIONS WITH THE INSURED SUBSEQUENT TO THE ISSUANCE OF THE POLICY AND PRIOR TO ITS MATURITY.